Obama Promises Lame-Duck TPP Push Despite Uproar Over Pro-Corporate Provisions

By Zaid Jilani via The Intercept

A PROVISION THAT would let foreign corporations challenge new American laws and regulations has become the latest flashpoint in the battle over the Trans Pacific Partnership trade agreement, even as President Obama on Tuesday said he will renew his push for its passage in the lame-duck session of Congress.

“We’re in a political season now and it’s always difficult to get things done,”Obama said at a town hall meeting in Laos. “So after the election, I think people can refocus attention on why this is so important.” He sounded confident: “I believe that we’ll get it done.”

The latest salvo from opponents of the deal came in the form of a letter to Congress signed by hundreds of law professors and economists – including Laurence Tribe, who taught Obama at Harvard – protesting the inclusion of “Investor State Dispute Settlement” (ISDS) provisions in the TPP agreement.

The ISDS provisions would empower corporations who object to U.S. laws and regulations that cut into their profits to sue the United States before an international arbitration panel. The signatories to the letter write that this “system undermines the important roles of our domestic and democratic institutions, threatens domestic sovereignty, and weakens the rule of law.”

Senator Elizabeth Warren, D-Mass., a leading critic of the ISDS provisions,introduced the letter on a conference call hosted Wednesday by the advocacy group Public Citizen.

“It’s about leverage,” Warren said. “Leverage for big companies to threaten an intimidate governments who might dare take action that threatens their profits.”

She cited the example of Canada being successfully sued under ISDS rules contained in the North American Free Trade Agreement (NAFTA) by a U.S.-based company that was denied a permit for an open-pit mining project.

The Obama administration has pushed back at critics of the ISDS provisions, saying that it is a routine system that exists in thousands of other international agreements, including 50 that the United States is currently a party to.

But that routine system has undermined domestic laws in some countries.

Buzzfeed’s Chris Hamby recently reviewed dozens of ISDS rulings, documenting how corporations used these international arbitration panels to avoid the reach of domestic courts.

For instance, following the ouster of Egyptian dictator Hosni Mubarak, the country sentenced Dubai-based real estate mogul Hussain Sajwani to five years in prison for corruption charges related to a sweetheart land deal between his company Damac Properties and the country’s Mubarak-era tourism minister.

Within a week of his conviction, Damac decided to sue Egypt using the World Bank’s arbitration process – arguing that because the previous regime had agreed to the terms, the deal was not criminal.

As Sajwani enlisted the help of some of the world’s top ISDS lawyers to argue his case in a court in Paris, Egypt decided to settle. The terms of the settlement are confidential, but we do know that Sajwani’s prison sentence was completely eliminated.

That set a precedent for a wave of ISDS claims. More and more firms used the ISDS process to avoid penalties handed down from Egypt’s courts.

Under the TPP, the U.S. would be exposed to a larger number of potential ISDS claims.

“If these provisions are included in TPP, the number of foreign investors who’d be empowered to use this mechanism would double from what we currently have in our 50 agreements already,” said Melinda St. Louis, international campaigns director at Public Citizen’s Global Trade Watch.

In all, Public Citizen estimates that passage of the TPP would newly empower over 10,000 U.S. subsidiaries owned by foreign corporations to launch investor-state cases against the American government.

Corporations from six countries that do not currently have the ability to bring ISDS claims against the United States — Vietnam, Japan, Malaysia, Australia, New Zealand, Brunei – would gain that right under the TPP.

As The Intercept has previously reported, banks and other financial institutions would be able to use TPP provisions to sue over virtually any change in financial regulations affecting future profits in an extra-judicial tribunal.

The United States has not yet lost an ISDS case, but is facing a major claim from TransCanada. The company is using arbitration under NAFTA to seek $15 billion after the Obama Administration decided not to approve its Keystone XL Pipeline project.